Apple recently rejected an update to Microsoft’s SkyDrive app for the iOS platform following a disagreement over whether it is owed the 30% cut of in-app purchases it typically demands. SkyDrive is turning out to be just one small part of the larger argument between the two companies as Office for iOS is being brought up as well.

As of right now, sources familiar with the ongoing negotiations between Apple and Microsoft are stating that the two companies are at a disagreement over the 30% commission Apple asks of storage upgrade sales made not only on SkyDrive but over applying the same commission to Office 365 subscriptions sold through Microsoft Office for iOS, which is expected to launch sometime next year. As one can imagine, Office has been a cash cow for Microsoft for quite some time and extending the services to the iOS platform will undoubtedly fatten the revenue income further. It’ll also bring significant benefits to Apple’s mobile platform, ones for which Microsoft feels it is owed a discount on the 30% cut that Apple would otherwise command on Office 365 subscriptions sold to is iOS users through it. Just to clarify, the apps are just part of a subscription that includes desktop access as well.

As a result of its point of view, Microsoft is pushing Apple to adjust the 70/30 revenue split in its developer license agreement. As predicted, Apple refused to comply to the suggested exception. It isn’t clearly exactly what sort of concession Microsoft is seeking but regardless of what it is, Apple’s evidently not willing to consider it. Apple stands firm in its position stating that if a customer comes through its gateway, it feels it is deserved the commission outlined in 11.12 of its developer license, one which states a 70/30 revenue split between the developer and Apple. The Cupertino California company declined to comment on any discussions it is having with Microsoft over Office for iOS, but it did provide a statement on its revenue-share rules, while stating the following:

Apple provides customers and developers the largest selection and safest way to discover apps with our curated App Store. We’ve designed our rules to be fair and consistent for every developer — free apps and services are distributed for free, paid apps and services provide a revenue share to Apple. We’ve paid out over 6.5 billion dollars to our developer community who have created over 700,000 apps.

Microsoft hasn’t responded to a request for a comment as of right now.

Who do you feel has the more compelling argument here? We’ll have to wait and see what is or what isn’t agreed upon all while also waiting for the release of Office for iOS.

It's Apples rules. Microsoft knew that before getting into the market. They can't ask for an exception if no one other app developer can, regardless of if it is Joe Schmo developing in his basement or Microsoft's developers.

Everyone makes money selling through apple! Microsoft need to accept that apples terms are what they are after all apple is the key millions of idevices! No agreement no cash for Microsoft! Apple will still get cash as there are plenty of office apps already most likely to be on better terms than microsofts!

Microsoft isn't disagreeing that apple deserves a "gateway" fee. The fine print is that long term subscription purchases made through iOS in-app purchase system will continue to be deducted the 30% fee EVEN IF THE USER MIGRATES TO A NON-APPLE DEVICE.

That's also where the SkyDrive dispute stems and apple needs to reevaluate. Glad microsoft is making a stand even if I'm not their biggest fan. Maybe more companies will think to support an alternative app ecosystem (ahem jailbreak cough).

It's just ridiculous that Microsoft wants special treatment because they are a big company. As a developer myself do you think I would like more than 70%? I sure do, but it's Apple's store and I agreed to their contract so I can't complain.

Sure they can. Companies do it all the time. Even Microsoft provides volume licensing at a discount. They can set it up based on selling x amount this much discount, the next x amount another discount. I"m sure it can be done.

It's just ridiculous that Microsoft wants special treatment because they are a big company. As a developer myself do you think I would like more than 70%? I sure do, but it's Apple's store and I agreed to their contract so I can't complain.

Exactly, you CAN'T complain, even if you wanted to, which it sounds like you do... I'm sure thousands of developers out there would like to complain about it too, but since there is no Developers Union engaging in collective bargaining with Apple, nothing will get done about it... However, since Microsoft is such a heavyweight, their voice does carry weight... I'm sure Apple is resisting not in the least bit because of the precedent it will set if it grants Microsoft an exception. Apple knows that then countless other developers will come out of the woodwork demanding exceptions of their own.